Honeymoon and introductory home loan rates

What the term means

Moneysmart's glossary says a honeymoon or introductory interest rate is "an interest rate offered for a short time at the start of a loan, credit card or savings account", and that for a loan "it is a lower interest rate that will eventually revert back to a standard rate". Its page on choosing a home loan lists "What happens when a fixed or introductory interest rate ends?" among the questions to ask a lender or broker that the Key Facts Sheet does not cover.

How long the period runs, and which rate follows it, is set by each lender and each loan. Neither Moneysmart nor RateSonar publishes a typical length, so read the loan's own documents.

A worked first-year saving

RateSonar's arithmetic, holding every rate constant, on a $600,000 loan over 30 years with principal and interest repayments:

• Taking 0.10 percentage points off the middle advertised standard variable rate (6.74%, as at 2 Nov 2026) saves about $477 a year.
• A discount of 0.30 points is roughly three times that figure for as long as it lasts. The saving scales in a straight line with the size of the discount.
• When the period ends, the saving stops. If the revert rate is 0.20 points above a rate you could have had elsewhere, you then pay about twice $477 a year more than you needed to.

So the sum to do is simple. Add up the discount you receive during the introductory period, then subtract what you pay extra in every later year compared with a plain loan. A short discount followed by a high revert rate can lose to a loan with no discount at all.

The comparison rate warning

Moneysmart describes a comparison rate as a rate that helps you work out the true cost of a loan, one that combines the loan's interest and most of its fees into one percentage. Whether a given comparison rate reflects the honeymoon period, the revert rate or both depends on how the lender calculates it, so ask. Our guide to the comparison rate covers what it leaves out.

Also look at the Key Facts Sheet Moneysmart points to. It sets out the rate, the monthly repayment, the establishment and ongoing fees and the total to be repaid, which lets you compare an introductory loan with a standard one on the same terms.

What to ask before you sign

• What is the introductory rate, and exactly when does it end?
• What rate does the loan revert to, and is it the lender's standard variable rate or a different one?
• Is the revert rate close to the variable rates on the live board? Check what comparable standard loans advertise as at the date you look.
• What are the establishment fees and the ongoing monthly or annual fees?
• Is there a discharge or exit fee, and does it change if I leave during the introductory period? Moneysmart's switching page lists a discharge (or termination) fee as a fee when you close your current loan.
• Does the loan have an offset account or redraw, and does it cost extra?
• Will I be able to ask for the revert rate to be lowered? See how to ask your bank for a lower rate.

Mistakes that cost borrowers

• Comparing first-year rates only. The loan that is cheapest for 12 months can be dearer over five years.
• Ignoring the revert rate. Write it down next to the introductory rate.
• Forgetting the exit cost. If you plan to refinance when the period ends, check what leaving costs. Our guide to the real cost of switching lists the fees.
• Not diarising the end date. A loan that quietly rolls onto a higher rate is how many borrowers end up paying a loyalty tax.
• Treating an advertised rate as your rate. Advertised rates are not what a given customer will be charged.

See today's advertised figures on the home loan rate board and compare lenders in compare rates. RateSonar shows standard advertised rates. It does not recommend a lender, and policies differ, so check your own lender.